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Why You Shouldn’t Sell Your Business “by Owner”

Why You Shouldn’t Sell Your Business “by Owner”

Trying to sell your business by owner is tempting, because just think of all the money you will save on a business broker’s commission. We get it…everybody wants to save money and get a great deal. That’s why we use coupons and shop the Black Friday sales. However, there are some things that are worth paying for, and professional assistance when trying to sell a large and complex financial asset like your company is one of them. Like taking your car to a mechanic to get it properly repaired, going to the doctor when you are sick and need care, and hiring a CPA to do your taxes, business brokers are the professionals who have the training, knowledge, and expertise to sell your business. 

Business sales are not like selling a home by owner. That process is a well-trodden path with lots of resources and assistance out there. Even then, it can be a tricky process to navigate if you don’t have a professional on your side, especially when things go wrong. Business sale transactions are substantially more complicated than a home sale and the pitfalls to watch out for are never obvious. That’s precisely where the experience of a great business brokerage comes in. As business brokers, we have the knowledge and expertise to not only find a qualified buyer, but to guide the deal to completion. Here we want to explain why we think you shouldn’t DIY (do it yourself) when selling your company. Even if this article doesn’t convince you to hire a business broker, we hope that it will make you aware of a few of the areas that will need your attention as you sell your business. 

1. The sale of your business needs to be kept confidential.

Keeping the sale of your business confidential is imperative. If it becomes public knowledge that your business is for sale, you risk sales suffering, losing accounts, employees jumping ship, or suppliers/vendors revoking credit. You will be an easy target for your competitors to start using this knowledge against you as well. It is very important that when you list your business for sale that it retains all of its customers, employees, and revenue. It needs to be at its peak performance to attract good buyers and the highest possible sales price.

Business brokers know how to successfully market businesses confidentially. They will also screen potential buyers before they ever receive any confidential information about your business. Furthermore, they will have every person who requests more information about your business listing sign a confidentiality agreement/non-disclosure agreement, to ensure that they keep the details private.

All of the advertising and marketing of a business listing points to the brokerage, and the seller’s name and the company’s name is never identified until after a non-disclosure agreement is signed by a potential buyer. When you list your business “for sale by owner,” your name and contact details are out there publicly, and you will be unable to control confidentiality. Confidentiality is vital to your business’s future success, and hiring a professional business broker can ensure that the sale of your business is kept as confidential as possible. It’s the cornerstone of everything we do, because we know how very important it is. 

2. You need to keep focused on running your business.

You are the expert at running your business and a business broker is the expert at selling your business. In order to attract the best buyers and get top dollar for your business, it needs to be running efficiently. It also needs to be financially healthy. Many business owners list their businesses for sale and mentally and physically "check out." However, this is the worst thing an owner can do, because the business needs to be at the top of its game while it is for sale.

Owners who choose to attempt to sell their business without professional help often get bogged down in the complicated and time-consuming aspects of a sale. They face various obstacles such as fielding buyer inquiries, transactional problems, a mountain of paperwork, financing issues, and buyer challenges. It’s impossible to do an excellent job running your business when trying to handle all of those demanding and time-sensitive things that are a business broker’s job to deal with. Working together with a business broker as a united team is the key to a smooth sale process.

3. Business brokers know where and how to successfully market your business to qualified buyers.

Business brokers have the latest sales and marketing tools available to them that make the businesses they list sell faster and attract a higher quality buyer. For example, a business broker should create a high-quality marketing package, advertise your business on numerous global websites, use digital marketing, webpage ads, business brokerage listing services, the local and state level multiple listing services for businesses (if available), direct mail and email campaigns, and market directly to their existing database of buyers.

Business brokers have an extensive database of buyers already looking to purchase because buyers who are looking for businesses to purchase also work with business brokers. Because of that, business brokers have an extensive database of buyers who are actively looking to purchase a business. Your business might be the perfect fit for a buyer that a business broker is already working with or has spoken to in the past. Many investors aren’t in a hurry to purchase a business, and they will often wait for the right opportunity to become available. Business brokers have the connections to these investors and can market your business directly to them.

4. The sale process is not often straightforward and business brokers can help with the details and the paperwork.

The amount of paperwork involved in selling a business can be overwhelming. A business purchase requires a tremendous amount of coordination and document gathering, not to mention having the right paperwork for the purchase agreement. You will want to make sure that the sale of your business is happening accurately and legally, and a business broker will have standard paperwork that is used exclusively for these types of transactions. 

The data you'll need to give to the buyer to evaluate your business during due diligence, the documentation required to close a deal, and the overall chasing that must be done between buyer/seller and their professional advisors can be astounding. A good broker will be an enormous help in letting you know what you will need to prepare for, and what you will need to do every step of the way. Do you know how to navigate the due diligence period? What about buyer financing? What about sorting through work in progress before closing? Equipment and property inspections? Dealing with a franchisor or landlord? Inventory? These are just a handful of items that will need to be addressed along the journey of selling your business, and business brokers have the experience to walk you through each step toward closing. 

5. You will dramatically improve your chances of sale completion with professional support.

It is estimated that 75% of businesses listed or sale never actually sell. Finding a buyer and getting the business under contract is the easy part of the process. Actually getting the deal to the closing table is the real challenge. There is a list of hurdles that can cause complications or result in the loss of a buyer. Buyer Due Diligence, financing, and leases can all be sticking points. However, business brokers can help all parties navigate these elements of the process as smoothly as possible. More importantly, they will know what to do if problems arise and can help minimize issues that do come up. This is what we call “deal CPR” and we are able to bring deals back to life based on what we know we can and cannot do to revive them. Your chances of completing a sale, and becoming one of the 25% who do sell their business, are vastly improved when you work with a business broker.

If you choose to hire a business broker...

Always remember that not all business brokers were created equal. It's important to get the right one onboard to help you. Work with one who is responsive, you feel comfortable with, and one who you feel understands your needs and goals. Your business broker should have your best interests at the heart of everything they do. So, find one who really cares about you and your business. A good business broker will be worth every penny, so make sure you do your due diligence and select the right one for the job. If you do decide to try to sell your business on your own, a good broker should still be willing to answer questions for you or help you where they are able to, so always keep those lines of communication open. You never know when you might need their assistance.